Dues owed to public and private power plants have accumulated to nearly Tk 460 billion (46,000 crore). Of this, around Tk 140 billion (14,000 crore) is owed to private sector oil-fired plants.
After Adani, owners of private power plants are also pressing for payment of arrears now. They say that without receiving their dues, they will not be able to purchase fuel to generate electricity. As a result, there may be load-shedding hassle during this summer season.
People associated with the power sector say that electricity demand exceeded 12,000 megawatts in February, even before the end of winter. In summer, demand could surpass 18,500 megawatts. The country has a generation capacity of 28,000 megawatts. However, due to shortages of fuel (gas, coal, furnace oil), there is uncertainty about meeting demand.
According to agreements, the Power Development Board (PDB) purchases electricity from all public and private plants. It sells electricity at a loss of five taka per unit, which is offset by government subsidies.
Electricity demand exceeded 12,000 megawatts in February. In summer, demand could surpass 18,500 megawatts. The country has a generation capacity of 28,000 megawatts. However, due to shortages of fuel (gas, coal, furnace oil), there is uncertainty about meeting demand.
However, the ministry of finance does not provide subsidies for jointly owned plants with other countries or for Indian power plants. As a result, the PDB’s deficit increases each year, leaving it unable to pay outstanding dues to the power plants.
Two reliable PDB officials said that the interim government did not raise electricity tariffs, and the new government also does not wish to increase prices at present. Therefore, the government must decide how to cover the PDB’s deficit. Otherwise, ensuring uninterrupted power supply during summer will be difficult.
The new minister for power, energy and mineral resources, Iqbal Hassan Mahmood Tuku, acknowledges that maintaining uninterrupted supply will be a major challenge. He told Prothom Alo that there is a shortage of gas, a deficit of fuel, and outstanding dues, creating a complex situation altogether.
People want electricity and will not consider that the previous government left arrears behind. The current government has only just taken office. Meanwhile, business owners have become restless over the recovery of past dues. He said discussions are ongoing and expressed hope that if fuel can be arranged, load-shedding will not be excessive.
Coal-based power under arrears pressure
Including Adani’s plant in India, coal-based generation capacity now exceeds 7,500 megawatts. The PDB aims to generate 7,100 megawatts in April. However, uncertainty remains regarding the supply of coal.
Compared to the previous year power generation increased by about 5.5 per cent in the last fiscal year. It is the least costly to generate electricity from gas.
Last year, 44 per cent of electricity was produced from gas, down from 48 per cent the year before. Production from high-cost oil-based plants (furnace and diesel) has been reduced, while coal-based generation has increased.
Of coal-based supply, the largest share of 1,436 megawatts is accounted for by Adani’s plant. However, there is a dispute over revising the contract with Adani, and the company is pressurising for payment due to mounting arrears. There are concerns that Adani’s supply could be disrupted, which would increase load-shedding even further.
The Payra Thermal Power Plant in Patuakhali supplies the largest amount of coal-based electricity domestically. The 1,320-megawatt plant is jointly owned by China and Bangladesh. It has arrears exceeding Tk 80 billion (8,000 crore), which may disrupt coal imports.
The Rampal 1,320-megawatt plant in Bagerhat (jointly owned by India and Bangladesh), the 307-megawatt plant in Barishal, and the 1,244-megawatt plant in Chattogram’s Banshkhali are also under pressure from unpaid dues.
People want electricity and will not consider that the previous government left arrears behind. The current government has only just taken office. Meanwhile, business owners have become restless over the recovery of past dues.Iqbal Hassan Mahmood, minister for for power, energy and mineral resources
Dispute over penalties at furnace oil-based plants
Furnace oil-based plants have a generation capacity of 5,634 megawatts. The PDB plans to generate about 3,500 megawatts from these plants. If gas supply declines further, output from oil-fired plants will need to increase. However, the PDB is facing disputes over unpaid bills with these plants as well.
According to the PDB, contracts allow plants to remain shut (outage) for 10 per cent of the year. Beyond that, they are not entitled to capacity payments and must pay penalties.
Due to mounting arrears, outage calculations were suspended from July 2022. The PDB later decided to calculate two and a half years’ worth of outages and recover penalties.
Plant owners have since exerted pressure, arguing that it is unreasonable to impose penalties while keeping bills unpaid. They have filed a complaint with the Bangladesh Energy Regulatory Commission (BERC) following legal advice. In an order on 24 February, BERC suspended penalty recovery until 3 March.
Former president of the Bangladesh Independent Power Producers’ Association (BIPPA), Imran Karim, told Prothom Alo that without payment of arrears, it will be difficult to purchase fuel and continue generating electricity.
If daily gas supply is 1.1 billion cubic feet, 534 megawatts of load-shedding will be required, at 1.0 billion cubic feet 1,104 megawatts, at 0.9 billion cubic feet 1,674 megawatts, and at 0.8 billion cubic feet 2,244 megawatts. This could mean up to three hours of load-shedding.
Gas shortages may worsen the situation
The PDB says that to ensure load-shedding-free electricity supply during the irrigation and summer season (March to May), 1.2 billion cubic feet of gas must be supplied daily. At the same time, adequate funds must be arranged to purchase coal and liquid fuel.
If daily gas supply is 1.1 billion cubic feet, 534 megawatts of load-shedding will be required, at 1.0 billion cubic feet 1,104 megawatts, at 0.9 billion cubic feet 1,674 megawatts, and at 0.8 billion cubic feet 2,244 megawatts. This could mean up to three hours of load-shedding.
Petrobangla has said that domestic gas production is steadily declining, and it does not have the capacity to import more than 1.1 billion cubic feet per day. Petrobangla has liabilities of Tk 228.38 billion (22,838 crore), owed to the National Board of Revenue, BPC and ITFC.
It is also under pressure because power plants are not regularly paying gas bills. Gas bill arrears owed by power plants total Tk 165.16 billion (16,516 crore).
M Tamim, former special assistant to the chief adviser of the caretaker government on energy, told Prothom Alo that dependence on gas must be reduced and preparations made to maximise generation from oil and coal.
Even then, the situation will depend on temperatures. If this summer is as mild as last year’s, there may be some relief; otherwise, load-shedding is likely during the summer, added he.